Some 250 chief executives have written to the Chancellor this weekend,
accusing the Treasury of ignoring evidence that Air Passenger Duty is
harming the economy

The Government has been accused of “turning a blind eye” to the damage caused to inward investment and job creation in the UK by a controversial tax on air travel.

Some 250 chief executives have written to the Chancellor this weekend, accusing the Treasury of ignoring evidence that Air Passenger Duty (APD) is harming the economy.

The UK has one of the highest aviation tax regimes in the world. In a recent study by the World Economic Forum, the UK was ranked 138th out of 139 countries according to the competitiveness of its air ticket taxes and airport charges – ahead only of Chad in Africa.

APD, which applies to all passengers flying from a UK airport, will be raised again in April 2014.

Rates have soared since 1994, when APD was introduced. Then, passengers paid £5 per person for short-haul destinations and £10 to travel further afield, but now as much as £188 can be added to a long-haul ticket.

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“Year-on-year APD rises are making the UK economy increasingly uncompetitive,” the chief executives, including British Airways head Keith Williams and Heathrow Airport boss, Colin Matthews, write.

“As UK businesses, we are bitterly disappointed with the Government’s decision to keep increasing a tax which acts as a barrier for business in attracting inward investment and creating new jobs.”

The business chiefs, who range from directors of large companies such as Emirates and Lufthansa, to small firms, point to research published by PwC earlier this year which claimed that scrapping APD would deliver a 0.45pc boost to gross domestic product within 12 months and create 60,000 jobs by 2020.

The study, which used economic modelling used by government departments and organisations such as the International Monetary Fund, estimated the UK would be £16bn better off by 2015 were APD to be abolished.

The research was dismissed by the Treasury but the 250 chief executives, who also include Craig Kreeger, head of Virgin Atlantic, are pressing for the Government to carry out and publish its own study into how APD affects the economy. A similar call was made earlier this year by the Commons Treasury Select Committee.

“In the current economic climate it will be the private sector that drives growth, but taxes like APD are hindering us from competing internationally and slowing us down in the global race,” write the chief executives, who are members of the campaign group A Fair Tax on Flying.

An HM Treasury spokesman said: “The Government has frozen APD in real terms since 2010, and in the last year, APD has not changed at all for the majority of flights. Passenger numbers are going up, and airlines do not have to pass on the cost of APD to passengers.

“However, it is important that the aviation sector plays a part in helping to bring down the deficit.”